Bringing America Back: A Bank Doing the Right Thing

With their high fees, foreclosures and the number of families left scrambling to keep their homes, these days banks are known more for taking than for giving.

James C. Smith, president Webster Bank, is working to change that perception. He doesn't believe that all the George Baileys, the kind-hearted banker from the holiday classic "It's A Wonderful Life," have vanished.

"George Bailey was there to help his customers when they needed him, and I think that's a lot of what we're all about, and that's why it's so meaningful to us," said Smith.

Smith's father founded Webster Bank during the Great Depression to help those who were struggling to buy and build their homes. The bank expanded over the years, and now has more than 150 branches in four states. Despite the growth, Smith said the notion of profiting by helping people is still its bedrock.

Instead of moving quickly to foreclose and cover losses, Webster Bank is committed to helping families stay in their homes.

"We have a responsibility to our customers to work with them. I think of it as being in our DNA. We're there to work with our clients, to help them through a very difficult time," Smith said.

Webster Bank owns 75 percent of the loans it services, so customers don't have to deal with mystery lenders. Customers also know who to go to when in trouble, because the bank assigns all customers a loan modification officer who works with them one on one.

Bonuses at Webster Bank are also tied to the number of loans modified, not foreclosures, and to families such as the Carapasos, that makes all the difference.

"Things went south and I was unemployed. We found ourselves starting to get behind on some of the bills," said Carmine Carapaso.

When he lost his job and his wife, Paula, suffered a heart attack and then a stroke, bills mounted quickly, and their home of 20 years was in jeopardy.

"They could have very easily just foreclosed on the house," said Carapaso.

A third of homeowners who applied for a mortgage modification through the nation's eight largest loan servicers were approved last year, according to the Treasury Department, but Webster Bank said it modifies well between 60 and 70 percent of applications. The Carapasos were one of the many the bank was able to help.

"What it means to me, being able to stay in this house, is everything. Our family was brought up here. We have so many memories, and they're wonderful. It means everything," said Paula Carapaso.

Smith said the bank's strategy of helping people who need it most is also good business.

"We think the net cost to the bank of what would have been all of those foreclosures, by doing it the way we did, we've saved tens of millions of dollars. If you do the right thing it can help you grow, and you truly can do well by doing good," said Smith.